Earlier this year, changes in Prudential Regulation Authority (PRA) guidelines created new challenges for buy to let landlords by making it much harder to prove affordability. Historically, the rental stress test for buy-to-let borrowing was 125%, meaning your rental income needed to cover 125% of your mortgage payments. However, the new guidelines mean that many lenders have increased this amount to 145%.
For many landlords looking to remortgage, this has caused a serious problem. If your rental payments don’t cover 145% of your mortgage payments, you may be required to make a potentially significant capital repayment to reduce your overall mortgage.
This situation can be complicated further if you are an expatriate looking to remortgage a rental property at home in the UK. Understandably, it can be more challenging for expatriate clients to research the best deals on the market. This is where using a broker to remortgage your property can add significant value.
Enness’ whole-of-market lender panel means that we constantly stay abreast of the best products on the market, and are able to report these to our clients accordingly. This week’s product of the week is ideal for both UK residents and expat clients who are looking to remortgage to a lower rate, but are concerned about the changes to affordability testing.
As mentioned, the usual rental stress test is now 145%—however, this product is tested at 125%, which is what many buy to let investors’ loans were calculated at prior to the PRA changes. This product can be used for loans up to 65% loan to value (LTV).
- 2.94% discounted variable rate
- 3-year discounted period
- £999 fee for loans up to £500,000
- 0.4% of the loan amount above £500,000
- 65% LTV
This is a fantastically competitive rate for an expat product; generally, expats will be looking at over 3% for this type of mortgage. If you are looking for a higher LTV, this lender also offers a 5-year fixed product with a marginally higher rate of 3.39% on a LTV of 70%.
If you’re an expat who is currently looking for a buy to let remortgage on a UK property, please don’t hesitate to get in touch. I am very experienced in dealing with expatriate clients and would be extremely happy to assist you.